Goin Down the Road Feelin Bad

This week I am using this column to reprint an article by Richard Russell, who has predicted every "Bear Market" for the past 30 years. Recently Russell has repeatedly expressed confusion about the world economy. However, this article articulates basic economic realities that we all might do well to understand.

"Take the pain." That's what American population and pols have been unwilling to do. To undo 60 years of inflation, they refuse to take the pain. We've refused to take the pain ever since WWII. A great group of bubbles has been created since WWII. But they are starting to pop one by one. The biggest bubble of all, the debt of the US. That debt must be addressed. To address that debt and all of the debt that has enveloped the US we must absolutely take the pain. Which is why I label this site, "Take the pain."

That's what nobody wants to do, and the politicians serve the people by keeping money flowing to avoid the pain. Question: Why is it that you never see compounding and debt mentioned in the same sentence? Answer: Because it is a poisonous combination due to the new trillions that have been pumped into the US economy. Based on the massive amount of money pumped into the US economy inflation should start to appear in 1-2 years. With inflation comes higher interest rates. Rates are synthetically low today but by 2013 they will be rising along with inflation. This is when the compounding of the debt starts. 

The US National debt is at 16 trillion, 40 percent of the debt matures in one year or less. The average maturity of all US debt is 4.3 years. All this debt has been rolled over at historically low interest rates. This is going to change. As inflation accelerates, rates move higher. The entire tax-take of the US is now 2 trillion. This is a tiny amount compared to the cost of interest on the national debt. In other words, the US will have to borrow huge amounts of money in order to stay solvent. The national deficit is increasing annually by more than 1.5 trillion per year. Thus the tax-take doesn't begin to cover the interest on the debt. Within a few years a massive amount of money that is pumped into the economy by the Feds will set off inflation. With inflation, interest rates will rise. 

Remember the entire federal debt must be rolled over every few years. It will roll over and compound with rising interest rates, a death knell for the US economy and the dollar. As the process continues, the exploding and compounding national debt will crush everything in its path. The dollar will collapse, and the US will no longer be able to borrow the money needed to cover its interest and expenses. The stock market is not going to wait for these events to materialize. It will start discounting the trouble way before it happens. I see any rallies (as the one we're seeing today) as oversold bounces and they should be sold into. 

The preferred position is no stocks, gold, and 10 ounce silver bars with some cash for practical purposes. We are headed for uncharted waters and in time all central bank created currencies will be crushed. Gold is the only currency that is not someone else's liability, and it should be accumulated. 

In the end, the problem is neither the US population nor its politicians are willing to take the pain. There are no free lunches, and there are no corrections with out pain. The pain is set in stone. It's appearing now in unemployment and loss of purchasing power and spreading poverty.

Richard Russell 

Spending Priorities

Last evening our commissioners spent over $425,000.00 to purchase a piece of land adjacent to Bayfront Park. I believe this was an unwise expenditure that accomplishes little, when the money could have been spent to enhance our community's attractiveness to visitors and perspective residents in more effective ways. Instead, we hear claims by the commission that a large project at Bayfront Park will somehow contribute to the island's welfare.

The money could have been used to create an island-wide municipal wifi network that would benefit all residents and visitors while modernizing our telecommunications image. Imagine the benefits for our community from having access to broadband internet access from our beaches, motels and businesses while creating income for our community.

A small part of the money could have been used to build several Bocce Ball and Pickle Ball courts at several locations around the island to attract people to share their time with one another. Instead we now have another acre of land.

About a decade ago the voters were asked to approve a bond for a proposed community center at Bayfront Park. The referendum, backed by our current mayor, was resoundingly rejected by the voters. Mr. Brown will not give up. He thinks the town's attorney and suspended, but soon to be returned, planning director will help him find a loop-hole in our weak codes in order to build a multi-million recreation center without having to ask the residents.

Longboat Key developed as an exclusive seasonal retirement community. Developers created large self-sufficient enclaves complete with swimming pools, recreation areas and spaces for social activities. Additionally, our population has aged and is now less mobile than ever before. Even if it is  desirable, it will take decades to reshape the social structure of Longboat Key to the point where the residents of all our self-sufficient condominiums are willing to take the extra effort to get in their cars, fight our seasonal traffic and participate in activities at a community center. If a community center is designed to accommodate our in-season population then it will be an expensive white elephant the other 8 - 9 months of the year, when few people are living on the island. Of those few summer residents, many are working or have families and will be unable to make use of a community center during the day.

The yearly cost of maintaining a large recreation center will far exceed the hundreds of thousands we already spend to maintain Durante Park, which is a wasteland most of the time. I frequently ride past Durante Park and seldom see any activity there. Why then do we want to build yet another expensive public facility that will be under-utilized and not attract tourists. Tourists are here solely for the beach experience, not a workout. Why build a costly recreation center for a community that has shown little propensity to engage in communal social activities.

Last week I sensed a further decline in town staff moral when they saw an eager commission effortlessly spend $450,000.00 on a piece of property, while at the same time not being willing to spend any money on long overdue employee raises for over three years. I complained at a commission workshop about this paradox. I was told that funds could not be moved to facilitate pay raises for employees. Now we see a token bonus to a hundred hard working staff with families that equals about 2/5ths of what the commission just spent for an acre of land. I look at this as being counterproductive. Our residents want great service and a functioning town government. Instead, the commission sends out signals that the entire staff is worth less than a piece of land that few residents will ever use.

To pay for the proposed community center, the current commission will probably ask that the town manager re-instate Ms. Simpson as the planning director, perhaps even with a raise, and once again rely on Ms. Simpson and Mr. Perssons to find a way to pay for a ten million dollar plus edifice at Bayfront Park, without seeking the approval of the taxpayers. I am so sure of this commission strategy that I have bet a lunch on it.

Several months ago, I wrote an article advocating utilizing available space in two existing buildings adjacent to the Publix property to quickly create an inexpensive community facility. If it was found that there was strong community support for a large community center, then the taxpayers could probably be persuaded to approve a bond to build a structure at Bayfront Park. Instead, the commission looks like it's willing to speculate with millions of your dollars for a project that has no previous credibility in our community.

The Bias of Ignorance

If what I am witnessing at recent Planning and Zoning Board meetings is the best this community can do, then perhaps it is time to do away with such a hopelessly biased institution and seek management of the town's affairs elsewhere. The PZB has deteriorated to being a group of appointees who are there because of who they know.


"This is stupid" says a resident after yesterday's PZB meeting. "This is the worst I have ever seen". I know this person has lived on Longboat Key for a long time and is one of the few residents who pays attention to the workings of town government. I see smirks and rolling eyes and yes laughter where no joke is intended.

The PZB meeting resembled the Mad Hatter's Tea Party. Some board members looked lost and ill- informed. Other board members minced minuscule concepts unrelated to the question at hand. At times it appeared that several board members were unaware of what was being discussed.

The planning department staff also appeared to be unsure of what was happening. At one point a staff member was questioned about the relevance of his report. His response was that we was telling the zoning board what they wanted to hear as requested at a prior meeting. He referenced the minutes from a prior meeting. Several attendees chuckled. Eyes rolled again.

As usual the chairperson was curt and abrupt and at times looked ill-informed or confused. We all should be thankful that Commissioner LeNoble, and his fellow commissioners, had the foresight to defang this politically appointed clique some years ago.

What is bias of ignorance? It is an unintentional bias that results from not knowing what one is talking about, of being ill informed, or so politically motivated, as to be unaware that severely limited decisions are being made, and never questioned. It is the lack of informed discussion-making at PZB meetings that promulgates still more ignorance based bias.

Anyone attending recent PZB meetings has to confront a rude chairperson who makes it know that she considers meaningful and studied input from residents to be "biased" propaganda as far as she is concerned. At the same time she welcomed a one hour twenty minute presentation by a cell tower lobbyist. The PZB chairperson did not find the lobbyist to be biased. Hmmmm. Who said "Don't confuse me with the facts, I know what I think"?

At two previous PZB meetings dealing with cell tower issues, it was evident that the members of the board were clueless that anything exists except cell towers. For these people Distributed Antenna Systems, Fixed Mobile Convergence and other alternative technologies are foreign words. In the area of telecommunications, where the PZB is concerned, the world is flat. They appear to like it that way if you review the questions put forth by various PZB members. As a body they have been singularly incurious about ways to improve cell phone reception without destroying real estate values and shutting out new and superior telecommunications technologies for years to come.

At the last PZB meeting there appeared to still be considerable ranker about the Commission's reversal of the PZB's recommendation that Moore's Restaurant be forced to sell at the bottom of the real estate market. I am proud that I was one of the four commissioners who voted to uphold the will of the voters, who overwhelming supported the referendum to allow Moore's to be rezoned residential. At that time it seemed that a couple of the PZB members exceeded the bounds of public office and that they should have been reprimanded or removed from the PZB.

We need to find a remedy for what is taking place at PZB meetings. We need to stop whatever is causing the rolling eyes and exclamations of indignation and dismay. The PZB has become a political hack for special interests on the island. Perhaps if the PZB became an elected body it would prevent the political packing that presently permeates what I consider to be a dysfunctional body. Because of their unabashed bias and lack of informed decision-making, the PZB is doing more harm than good in our community.

The More You Know

"The more we know" is a recurring theme in my efforts to add to the community conversation. I have contended for decades that small town government lacks the resources to find optimal solutions to community challenges such as our communications infrastructure, our pension plans funding and our beach management practices. Many of these challenges are technologically complex even for much larger communities with departments of specialized workers. I have always worried that we are making poor choices because we fail to recognize our limitations as a small town with only a few minimally trained workers in each department.

The previous town manager frustrated many commissioners and town staff with his unwillingness or inability to investigate a range of options for the many issues that confront any small municipality over time. He was known for quickly forming uninformed opinions and then refusing to get off the dime even in the face of overwhelming evidence that his positions were unproductive.

The journey is the destination. This is an adage that might serve well as a road map for a town government with limited staff resources and an unpaid commission. Small communities must rely on outside advice, hopefully from disinterested experts in various fields of knowledge. Small town governments must resist taking the short route and taking the advice of the first "expert" to come down the road or worse yet an "expert" who espouses some sort of political agenda. Making the journey the destination  requires a commission that is ever vigilant to well camouflaged propaganda and motives.

Traditionally our town manager has assumed the role of "decider" since the town manager presents the commission with most, if not all, of its information. He also formulates the choices available to the commissioners and in general holds most of the cards. The current commission has been a good deal more active than previous commissions. I feel that this has been positive for our community even though I may disagree with some of their policies. I hope the commission will enjoy a long honeymoon with the new town manager and work as a team to intelligently formulate informed decisions concerning some fairly complex problems.

It is easy to make decisions in an information vacuum. The more we know about all the challenges  confronting our community, the more likely we will make better decisions. The problem as I see it is knowing when you need to know more. Often problems appear to be easily understood when in fact there are subtle nuances that complicate the decision making process. Taking time to throughly examine issues may be the only way to arrive at any sort of sound conclusions.

Ask a Question

• Do Background Research
• Construct a Hypothesis
• Test Your Hypothesis by Doing an Experiment
• Analyze Your Data and Draw a Conclusion
• Communicate Your Results

The bottom line is that our town government needs to cast a broader information net in the future. We need to enlist more experts in the process. We need to insist that these experts be truly disinterested contributors. Decisions need to be based on a sound understanding of the problem and an open-minded approach to resolving the problem.

We are a small community with limited governmental resources. We are not alone in this. I have found that there is already a wealth of information available by consulting with other communities with similar problems. What we should not do is assume we know everything.

See also: http://lbk-folk.blogspot.com/2011/02/skeptical-advice.html